Archive for March, 2016

Since 28 November 2008, Icelanders, both companies and individuals, have been locked inside capital controls. Those who owned assets outside of Iceland before that date were allowed to keep them abroad. Now it turns out that the wife of prime minister Sigmundur Davíð Gunnlaugsson, Anna Sigurlaug Pálsdóttir, was one of the lucky ones with assets outside of capital controls, free to invest according to her choice.

The news came out Tuesday evening when Pálsdóttir announced on Facebook that she hoped to put all rumours to rest by acknowledging the existence of a company of hers, “registered abroad” but administered by a bank in London. This company had been set up some years ago as an investment vehicle around her inheritance.

Only after request from the media was it confirmed that this company, Wintris Inc., is registered in the British Virgin Islands. In Iceland, these companies go by the name of “Tortola companies” and have a very unflattering tone since so many of the viking raiders, the largest shareholders in the Icelandic banks and their fellow travellers, hugely enriched by their close connections with the banks, also had BVI companies.

In her Facebook message Pálsdóttir said that the company had been set up in 2007 at a time when the couple did not know whether they would be living in Britain or Denmark, which meant that having the company abroad would have been convenient.

This explanation does however bypass the fact that at the time the Icelandic banks were operating abroad and there was no hindrance to move capital in and out of the country. Living in Britain or in Denmark would have made no difference to the availability of the funds had they been kept in Iceland.

Also, the sale that released the funds was made in Iceland, meaning that the funds were most likely moved abroad for other reasons than availability abroad. The wife and her husband’s spokesman strenuously deny that this arrangement had any tax purposes. It had all been above board, all reported to the Icelandic Inland Revenue.

The question remaining unanswered is why these funds have not been moved back to Iceland, not least after her husband became party leader in January 2009 or at the latest when he became prime minister in spring 2013. At the time, it was clear that one of his government’s main task would be to lift the capital control, as the prime minister had indeed repeatedly promised to do speedily when in office.

That task in not yet completed but will most likely be very soon; the governor of the Central Bank Már Guðmundsson said Wednesday that an announcement on the offshore króna – the last major part of the capital controls still unsolved – could come as soon as Thursday 17 March.

The reason for Pálsdóttir’s sudden declaration seems to stem less from a certain urge for transparency and more because a journalist had been asking about the existence of a BVI company owned by Pálsdóttir. However, Icelanders will be asking themselves how fit and proper it was that a prime minister of a country locked in by capital controls was wholly unencumbered by these same controls as the family assets were safely beyond the controls.

Update: Turns out the prime minister’s wife not only owns a Tortola company but she holds claims in the collapsed banks, ca ISK500m or €3.5m, making her a creditor in the banks. Since her husband didn’t hold back earlier on, before the government was actually negotiating a solution to the capital controls, to call the creditors “vultures” his political opponents haven’t held back in pointing out that being a creditor would make his wife, seen from his point of view, a vulture. – And which bank does the couple choose? Credit Suisse, which has quite a number of Icelandic clients through ties established before the banking collapse in 2008.

Further: Upcoming on Icelog is a blog on the latest debate in Iceland re Wintris, other ministers who own offshore companies and more on Icelandic offshorisation. This will be a summary of these matters before Rúv and other media will start publishing reports based on leaked material in cooperation with International Consortium of Investigative Journalists this coming Sunday at 18GMT. This leak contains wealth of material regarding Iceland, via Landsbanki Luxembourg as indicated on news in Iceland so far.